SKS Microfinance

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SUE Microfinance Ltd.
Industry Finance
Founded 1998
Headquarters Hyderabad, India
Area served
Key people
M R Rao CEO- Managing director
Number of employees
over 20000

SKS Microfinance Limited (SKS) is a non-banking finance company (NBFC), regulated by the Reserve Bank of India. SKS' mission is to provide financial services to the poor under the premise that providing financial services to poor borrowers helps to alleviate poverty.[1][2] The company operates across 19 of 28 Indian states. SKS was founded in 1997 by Vikram Akula, who has served as its executive chair until November 2011.[3]


On 28 July 2010, SKS Microfinance debuted on the Bombay Stock Exchange. Muhammad Yunus expressed concern that going public would put the demands of shareholders ahead of the poor.[4] He added further, "If they do it, I cannot stop them but I would encourage genuine Microcredit programs."[5] However, the differing legal frameworks in Bangladesh and India could justify SKS Microfinance's IPO initiative. Yunus's Grameen Bank in Bangladesh is funded primarily by deposits raised from its own borrowers and non-members, whereas Indian MFIs are prohibited by law from collecting deposits.[6]

SKS founder Vikram Akula resigned from the board on 23 November 2011. PH Ravikumar, an independent director and former chief executive officer of NCDEX took over as the interim non-executive chairman of the only listed microfinance institution.[7]


In 2012, an independent investigation commissioned by the company linked SKS employees to at least seven suicides of creditors in Andhra Pradesh. A second investigation said SKS may have been involved in two other suicide cases.[8] In 2012, SKS Microfinance cut 1200 jobs and closed 78 branches in Andhra Pradesh.[9] Interviews with family members of the deceased, by BBC suggested that the reason for these suicides appeared to be large sub-prime loans taken by the villagers, with the active encouragement of SKS loan agents.[10]


SKS Microfinance offers 8 financial products and services to its clients - Income Generation Loans, Mid-Term Loans, Mobile Loans, Sangam Store Loans, Housing Loans, Funeral Assistance, Gold Loan, and Life Insurance.[11] The company lists some of the social benefits of its financial product and service offerings as "providing self-employed women financial assistance to support their business enterprises, such as raising livestock, running local retail shops called kirana stores, providing tailoring and other assorted trade and services."[11]


SKS Microfinance follows the Joint Liability Group (JLG) model. The methodology involves lending to individual women, using five– member groups as the ultimate guarantor for each member.[12] Through group lending, situations of adverse selection and moral hazard due to asymmetric information are better managed.[13] "Social collateral" replaces asset collateral (which is lacking in the poorer segments of society). Such a system works because India is still a highly community-centric society. The concept of honour and respect within society is deeply rooted in Indian culture and willful default invites condescending glances, humiliation and even ostracism.[14]


  1. ^ "SKS: Know SKS: Our Approach". Retrieved 2012-07-17. 
  2. ^ [1] Jonathan Murdoch, "The Microfinance Promise,"
  3. ^ "Vikram Akula quits SKS". The Hindu (Chennai, India). 23 November 2011. 
  4. ^ [2] ABCNews, SKS Launches India's First Microfinance IPO
  5. ^ [3] Microfinance Focus, "Microfinance pioneer Prof Yunus raises concern over SKS IPO,"
  6. ^ [4] Microfinance Focus, "Exclusive: SKS Microfinance journey to IPO – An inside story,"
  7. ^ "SKS will miss Akula; to raise funds via QIP in FY12 - CNBC-TV18". Retrieved 2012-07-17. 
  8. ^ Kinetz, Erika. "AP IMPACT: Indian lender SKS' own probe links it to borrower suicides, despite company denials". Associated Press Business Writer. Associated Press/Yahoo. Retrieved 25 February 2012. 
  9. ^ "SKS Microfinance cut 1,200 jobs in Andhra Pradesh". The Times Of India. Retrieved 10 May 2012. 
  10. ^ Morris, Madeline. "'India's Microfinance Meltdown' for BBC Newsnight". You Tube. BBC. Retrieved 23 July 2015. 
  11. ^ a b "SKS: Our Work: What We Do: Our Products". Retrieved 2012-07-17. 
  12. ^ "SKS: Know SKS: Our Approach: Methodology". Retrieved 2012-07-17. 
  13. ^ [5] Prabal Roy Chowdhury, "Group-lending with sequential financing, joint liability and social capital,"
  14. ^ Eric Savage, Abhijit Ray & Abhishek Fogla, "Indian Microfinance: Swimming Fully Clothed!,"

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